Banking and Millennials: Why Banks need to focus on Human Values
The research is in! Bank customers, millennials in particular, want to do business with brands that demonstrate social responsibility.
Millennials are on the cusp of surpassing Baby Boomers as the nation’s largest living adult generation — 73 million strong according to the U.S. Census Bureau. An estimated $30 trillion in wealth will transfer from baby boomers to millennials over the next 30 years according to the Gallup Institute. While everyone seems to agree on the importance of next generation bankers, significant challenges remain for retail banking leaders who want to engage the millennial banking segment.
Millennials are not extreme brand loyalists; they embrace change and desire personalized services that adapt with them. A Kasasa study found that 82% of Millennials don’t mind changing banks and 83% of them would go to the competitors who offer more favorable features/conditions. Gallup analytics show that millennials in the U.S. have the lowest levels of customer engagement in the retail banking industry (only 25% were fully engaged).
What can banks do to capture millennial customers?
The key is to differentiate your customer experience. Below are some data-driven insights that show how to optimize your banking experience for millennials.
1. Banks that relate to a social cause are big attractors for millennials
Millennials tend to weigh the integrity of a company against their own set of personal values. According to a 2015 Cone Communications Millennial CSR Study, “over 9-in-10 millennials would switch brands to one associated with a cause,” and millennials are “prepared to make personal sacrifices to make an impact on issues they care about, whether that’s paying more for a product, sharing products rather than buying, or taking a pay cut to work for a responsible company.”
2. Millennials want companies to offer some kind of intangible value that money cannot buy
Millennials are demanding of brands; they use their dollars to have a voice and expect honest and authenticity. They are attracted to companies that have unique initiatives that will provide them with a lasting impression. Another Cone survey found that 87% will purchase a product because a company advocated for an issue they cared about, and millennials are more likely than other generations to research the issues a company supports and the extent to which the company contributes.
3. Millennials want to communicate with banks via their favorite channels including social media
Millennials have a strong desire for their bank to communicate with them through their preferred communication channels. Contrary to this, a 2017 FICO study found 43% of millennials don’t think that their bank communicates to them through their preferred channels. Millennials spend a huge amount of time on social media — checking their favorite social media accounts up to eight time per day. A Forrester study found 21% of Generation Z stated that a reason to change the company (including banks) could be the poor social media support. The FICO study also showed that millennials conduct the most banking-related activities via digital channels (80% balance, 76% fraud check, 65% transfers). They will also not respond to generic marketing materials that they do not feel is custom fit for them. Therefore the most effective way to connect is by talking to them through their preferred channels, in their language.
4. Millennials are looking for something to identify with and be inspired by.
Millennials crave connection and inspiration, they need stories to trigger a reaction, or a nudge to start putting a plan in place. Carrie Anne Cormier, VP of Strategy at Avidia ($1.2B in assets) says, “millennials are typically not scouring the Internet to find the coolest free checking account, they’re looking for things they identify with.” Millennials want to associate with a company that is an extension of their own personal values. They will not hesitate to shop around to find the most suitable option and are more likely to connect with companies that have a strong digital component. Banks that take advantage of insights about millennial behavior have a rich opportunity to make the right offers and subsequently increase customer satisfaction.
In summery, I will leave you with a quote by Alex Krueger from an article called the “Financial Brand.”
“Millennials understand the meaning of life and they are therefore more focused on human values. And at the same time, they are incredibly pragmatic. This means, they will not swallow the brand’s promises — they are keen on certain actions: here and now. Actions that will change the world for the better. Empty marketing promises do not work with this younger consumer. Brands will have to answer for their words and to show the meaning of their existence. It may seem surprising, but the new generation is aware that they are guests on this planet, and looking for responsive service. Younger consumers are aiming at not just saving the planet for future generations, but also at improving it. The companies who don’t share these values have no place in the future.”
Banks that offer charitable features and promote a social impact strategy will stand out in the market to match the empathetic nature of millennials. This is a gem for banks and it also creates the business case to invest in initiatives that will really do something good for the world. By weaving simple social charitable initiatives into your customer experience, banks can lead the way in creating the kind of world we want to leave for our grandchildren. Doing well by doing good is a huge opportunity in many ways.
Check out Goodworld’s charitable tools for banks for some simple ways to integrate social impact into your mission.